Hawaii is once again in the national spotlight — this time not just for its beaches and aloha spirit, but for a new tourism tax that’s tied to climate change and sustainability. The state had planned to roll out a first-of-its-kind levy on cruise ship passengers in 2026, but a federal appeals court has temporarily blocked part of that plan. Here’s what your customers need to know.
What Is Hawaii’s “Green Fee”?
Hawaii lawmakers passed a new tourism tax law — often called the “Green Fee” — designed to help the islands cope with the costly effects of climate change. The law:
Raises the state’s transient accommodations tax (TAT) on hotel rooms and short-term stays by a small amount, increasing the state portion to 11%.
Applies this tax for the first time to cruise ship passengers while their vessels are docked in Hawaiʻi ports. This meant cruise visitors would see a prorated accommodations tax applied to their fare.
Counties can add up to an additional 3% surcharge, meaning visitors could pay as much as 14% in combined state and county taxes on lodging.
Officials estimated the tax could generate up to ~$100 million annually to fund coastal restoration, wildfire resilience, beach erosion projects, and other climate-adaptation efforts.
This framework was intentionally broad — applying the same type of tax to both land-based lodging and cruise ship accommodations — to promote fairness and make all visitors contribute to protecting Hawaii’s environment and communities.
A Federal Court Blocks the Cruise Portion — For Now
While the Green Fee law was expected to take effect in January 2026, a federal appeals court has now blocked the section that would apply the tax to cruise ship passengers. Opponents — including the Cruise Lines International Association and some local tourism groups — challenged the cruise-tax provision in court, arguing that part of the law violates the U.S. Constitution and federal statutes.
As of now:
The appeals court has issued an injunction, meaning the cruise-specific tax cannot be enforced until the legal challenge is resolved.
The rest of the Green Fee (such as the increase on hotel and short-term rental taxes) remains in place and isn’t affected by this ruling.
Hawaii officials remain confident they will ultimately uphold the law, though the appeal continues through the legal system.
Why This Matters for Travelers & the Tourism Industry
This case highlights a few key trends and concerns:
Tourism vs. sustainability: Hawaii’s government wants visitors to help pay for environmental protection, disaster mitigation and long-term climate resilience — issues that directly affect the islands.
Legal and economic pressure: Major tourism sectors — especially cruise lines — argue that the tax could raise costs, impact travel demand, or exceed state authority over maritime commerce.
Uncertainty for 2026 travel planning: As the law stands, land-based visitors will pay the expanded tax starting in January, but cruise passengers may not be taxed until the lawsuit is fully resolved.
If you’re planning a Hawaiian getaway in 2026:
Expect higher hotel and short-term rental taxes under the new Green Fee law.
The cruise-ship tax component has been paused by a federal court decision, so it won’t apply immediately while the legal process continues.
Even with changes, these taxes support efforts to protect Hawaii’s natural beauty and infrastructure in an era of climate challenges — something that resonates with many environmentally-minded travelers.
